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Collection of full-length papers and in-depth analysis of economic and management issues.

Sustainability Management and Corporate Competitiveness Model

Sustainability Management and Corporate Competitiveness Model

KIM Jong-Nyun

Dec. 13, 2012

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Originally released on October 10, 2012

Global companies have experienced huge changes during the first decade of the 21st century in terms of competitiveness and corporate value. This study analyzed the business performance of the world's 100 largest firms in terms of market capitalization, excluding financial institutions. The analysis found that the 2000-2007 period was an era of growth based on restructuring and business transformation, and the 2008-2011 period was one of heightened interest in sustainable growth in the wake of slowing growth and falling corporate value. The analysis also found that the correlation between competitiveness/dynamic capabilities (DC) and corporate value substantially weakened during the latter period. Fifteen global firms were selected as case studies, all of which saw their corporate value rise due to factors other than competitiveness/DC and were ranked higher by sustainability management assessment institutions. As a result, six trends for sustainability management were induced.

The selected firms all consider caring for health, safety and the environment (HSE) as an important motivation for business transformation. As a part of their efforts to expand consumer accessibility, the firms strive to seize business opportunities in markets for low-income households. They believe that a sound business environment based on "connection and cooperation" is the basis of competitiveness and create a virtuous cycle benefiting both business and regional communities. They expand the concept of corporate social responsibility (CSR) from sharing to giving opportunity for others to share. They are also aware that the standards for good workplace (GWP) and employee satisfaction shifted from financial compensation to better quality of life.

Based on the case studies, the study expanded the existing SERI corporate competitiveness model. The three axis of product, operation and customer were extended into externality, co-evolution and empathy, respectively with HSE and acce ssibility as product leadership elements; ecological partnership and regional harmony as operational leadership elements; and GWP and CSR as customer intimacy elements. These six elements are all sustainability management factors.

To make sustainability management an engine for higher competitiveness, the six elements should be integrated into everyday business operations. Sustainability management needs to be recognized as a means to modifying the way of business, not as additional input of resources. It is important for firms to publicize their sustainability management practices in a consistent manner in today's era of open communication and information. Lastly, key performance indicators should be devised so as to correlate sustainability management to job performance.

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